Money: Women lag in money knowhow

By PHILIP MACALISTER

Managing money has traditionally been a male thing. In the past men have often been the major, or only, breadwinners and they have tended to be the ones who looked after money as well.

Now, women are playing a greater part in the money management game.

In the past two decades women have moved en masse from the kitchen to the executive suite (and many professional women are better at their jobs than their male counterparts).

Many women never marry. Many of those who do, find their relationships end in divorce. Finally, it is a fact that women live longer than men.

Despite these changes, there is evidence to suggest that while women are succeeding in the workforce they lag when it comes to looking after their earnings.


Australian author Viv James, a senior funds management executive, says money management is a vital skill which women haven't mastered as well as men yet.

"It's an essential tool for all women to be able to manage their money," Mrs James says.

Educating women about how to manage their money was the primary motivation behind writing her best-selling book The Woman's Money Book, which has become the Edmonds Cookbook of investing for women.

She says men and women have many things in common when it comes to money management, but there are important characteristics that differentiate them.

First, women tend to spend less time in the workforce and the time they spend working is often broken by taking maternity leave and bringing up a family. Second, they tend, on average, to earn less than men.

Exacerbating these points is the fact that women live longer - on average nearly a decade more than men.

This puts women at a significant disadvantage to men, and that situation is not helped by their attitude to money management.

The Women's Economic Status report of Australian and New Zealand women compared men and women who had the same work history and incomes and looked at how they invested their money.

It showed that women earned less on their investments as they were more risk averse. That is, they would prefer to put money in safe, lowinterest cash and bank deposits, rather than using shares and property for growth.

Also, there is a belief that one needs to earn a lot of money to build wealth. Rather (and this goes for men as well), with a little budgeting advice and cutting back on small, but numerous, items like cappuccinos and muffins, that small change can be invested and will grow to be significant.

Mrs James says that although women are making progress in the equality stakes, and a number of women have broken through the glass ceiling, there is still a need to provide better financial education information to them.

One of the other findings in the Equal Status survey last year was that 70 per cent of women respondents felt they were too pushed for time to deal with their finances compared with 56 per cent of men.

It may come as no surprise to many men, or women, that the biggest financial problem women face is credit cards.

"Credit cards are by far and away the biggest issue for women," Mrs James says.

"If used wisely they are a terrific shortterm money management tool. If they are used poorly they are a disaster."

She says it is okay to use credit cards as a shortterm finance option, but it is important to pay back the full amount when it is due to avoid paying high interest rates on the outstanding amount.


Mrs James says women tend to be reluctant to seek advice from professional financial planners.

A number of financial planners have tried specifically to tackle the women's market but most have failed.

The reasons are many and varied. Trish Lynds, from Prosperity Partners in Auckland, says women tend to procrastinate and not make decisions.

"Quite a few of them still have the Cinderella complex," she says and they expect their spouse to look after them.

One of the best pieces of advice for women, she says, is make sure you don't spend all your money on running the household.

Often most of the household expenses are paid for out of the woman's purse.

Money Managers has twice tried to establish firms that are run by women for women - neither attempt has taken off. One of the reasons is that women often prefer to deal with men when it comes to financial affairs.

While targeted female financial planning firms have not been successful, many planners say that they have women clients, and a number of these are people who have lost their spouse.

Mrs James says the women in the survey who have sought advice were more satisfied with the results than the men were.

Over all, there is a greater need for women to learn more about personal finance.

"Women are still the gender with the greatest vulnerability to a shift in financial circumstances caused by life experiences that they are not able to control. Divorce, retrenchment or the death of a spouse are powerful wake-up calls which actually make more women aware of their financial vulnerability," she says.

There is a powerful message here for men, too.

Help your spouse become better educated in managing financial affairs, because they will probably have to take control of the finances at some stage.

Men need to think about it this way. Imagine that throughout your life you have looked after the family finances and made sure the money isn't just frittered away. But once you die, your wife will have to take over the finances and before long all that hard-earned and well-managed money is just blown away.

Now that is enough to make you turn over in your grave.

* Philip Macalister is the editor of online money management magazine Good Returns